By Pooky, this blog economic journalist
Korn Not Phased:
Korn, that financier Thai finance minister, says Dubai World collapse will not impact Thailand much, and the stock market, that tanked close to 20 points earlier, rebounded. Korn said Dubai World collapsed because of over expansion, but that Thailand has no such problems.
So it looks like everything is back to business as usual in Thailand, with the Dubai World crisis, just another mosquito bite that really means nothing.
The problem is that sometimes the mosquito carries with it, a deadly decease.
What Dubai World represents is nothing less than the panicle of Middle East oil riches, that went on a global investment drive. In Thailand, if you follow the newspapers, before the Dubai World collapse, it was filled with news of Middle Easter business coming to invest in Thailand.
One such investment, is in supporting the Thai Muslims Bank, in a major expansion drive in Thailand. Then there are a string of Middle East investments in food, hotel and office building investments in Thailand.
So what happens when Dubai World, “The Shining Star” of Middle East global wave collapse? Obviously, it send a signal to all the other investments group, not to be so aggressive. That likely less aggressive expansion, will probably mean a cut-back in investments that seem like “A Bridge Too Far.”
Young Man in the Middle East:
Thailand’s prime minister, Abhisit, just visited the Middle East, most likely, to indicate to Taksin, that he will not let Thailand be isolated globally by Taksin. But as Al Jazerra reported the visit, any Middle Eastern reader, will come away seeing Thailand as just another “Problem Child.” Worse, in the Middle East, the culture is very conservative, where elders are greatly respected by the young crowd.
The picture of Abhisit, smiling like there is no problem in the world, standing in a group of elderly Middle Eastern statesman, which was probably published in the entire Middle East, indicates to most Muslim who saw it, as a country run by a “Young Man.”
Taksin Scored Points:
Then right on the heels of the Middle East visit, Malaysia is heading to Thailand for talks with Abhisit, particularly on Southern Thailand. Yet Taksin, through Chaovalit, has earlier proposed a the concept of an independent City-State in Southern Thailand. That move, was widely reported in the Middle East, and it played extremely well with the Globe’s Muslim audiences.
The Dubai World collapse, will likely still see many Middle Easter business heading to Thailand for investments, however, the trend is now in the retreat, and it is no-longer Thailand that is attracting them, but the particularities of the investments.
Blue Ocean Turns Muddy:
In the mean time, Thailand sees the Middle East as a blue ocean market, or new emerging market with great potential. And Middle Eastern tourist is becoming important to Thailand, particularly in the medical tourism area.
The wider cultural and economic message gave in the Middle East, with the collapse ot Dubai World, is that even a cutting edge investment empire in the center of the globe oil trade can fall. Clearly, the message is against taking risks and to be cautious. In this environment, the consumers in the Middle East, will likely need time to evaluate their plans.
Globally, initial reaction was a severe stock market retreat. That indicates, the level of fear in the market. All in all the collapse of the Dubai World, tantamount, to knocking off another major bright spot in global economic recovery. If Dubai World can collapse, the argument is, what else are there?
For Thailand’s finance minister, Korn, to say the collapse, has no impact for Thailand, could be both right and wrong. It is right, because what we are talking about is the future. But it is wrong, because Thailand will have to exists, in that future.
In the mean time, as Korn says proudly that Thailand has no bubble, as far as a bubble is concerned, the World Bank had warned Thailand that a bubble situation might be developing in Thailand. Even with China, many now speculate that it is a bubble in the making. The Japan, after registering great growth in the third quarter, now sees its currency hardened to the point that a central bank intervention is close.
The bottom-line, is that the fall of Dubai World, had hit the globe. And obviously, Thailand is part of the globe. For Korn, to say nothing to worry about, is like saying let the mosquito bite because it is nothing much.